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Interest only mortgages
Comments
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Does the lender know it is a 'buy to let', or is this originally a householders residential mortgage and he has since let it out?
Excellent point Amnblog ..... !!!
Why didn't I think on and realise it may be a temp CTL agreement and not a BTL mge, which would explain the lenders IO questioning..... doh :doh:.... !!!!!! I'll put it down to having a blonde moment
!!!
If that is the case, then the lender may not be too happy with redemption being from sale of the property due to their expectation that at some point within the short term, the property will revert back to your pals primary residence. So they may look to move it onto C&I, or if your pal admits no intention of moving back in (ie longterm rental), that its fully tsfd onto a BTL, with either them or an alternative provider.
If you give us a bit more on the nature of the mge arrangement, we'll advise.
Hope this helps
Holly x0 -
Thanks for all the useful comments.....Thrugelmir wrote: »Perhaps it's a realisation that his plan isn't going to pay dividends. Selling the house to clear the debt is the easy part. Then only creates a further series of issues to be resolved in later life. Particularly in retirement. As this is the time in life where owning your home really pays off.
His plan is very simple: sell the house or write a cheque.
He has his own house, no mortgage. The property to which the mortgage relates is a BTL investment so his plan is to sell it at a convenient point before the mortgage is due to be repaid and before he retires. If selling was a problem at the time he would write a cheque using cash he already has in the bank, the proceeds of a matured endowment policy that the mortgage provider was not interested in when he applied for the mortgage. He sees no problem at all with this plan.holly_hobby wrote: »He pays the chargeable monthly interest on time - as a result the debt itself remains ringfenced and unaffected, which is why the lender is enquiring what his repayment stratergy is.
Your pal really shouldn't be offended, its a reasonable question from the lender. After all if you lent him/her £100 and they just paid you interest each month, you would at some point ask what their plans were with regards to actually repaying you the £100 ?
Holly x
I agree with you! I have had the conversation with him and he thinks that until he shows any evidence of being financially unstable they are just meddling having failed to ask the question at the start of the mortgage.Does the lender know it is a 'buy to let', or is this originally a householders residential mortgage and he has since let it out?
Yes they know. He applied for a the loan as a BTL mortgage on a really good deal (Base Rate +0.5% I think, no time limit).
No doubt he will work it out.Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.0 -
Yes they know. He applied for a the loan as a BTL mortgage on a really good deal (Base Rate +0.5% I think, no time limit).
Thats good news, if this is a BTL mortgage (and not a residential mge with consent to let as raised by Amnb.), your pals repayment stratergy of selling the property should (as previously discussed) be entirely acceptable.
With regards to enquiring at outset re his repayment plans, as I explained the lender is just being super cautious re the recent FSA (now FCA) directive re establishing mortgagor repayement plans for residential IO arrangements.
Its really nothing to be concerned about ..... but ignoring their request for details may well cause issues
Hope this helps
Holly0 -
holly_hobby wrote: »Excellent point Amnblog ..... !!!
Why didn't I think on and realise it may be a temp CTL agreement and not a BTL mge, which would explain the lenders IO questioning..... doh :doh:.... !!!!!! I'll put it down to having a blonde moment!!!
If that is the case, then the lender may not be too happy with redemption being from sale of the property due to their expectation that at some point within the short term, the property will revert back to your pals primary residence. So they may look to move it onto C&I, or if your pal admits no intention of moving back in (ie longterm rental), that its fully tsfd onto a BTL, with either them or an alternative provider.
If you give us a bit more on the nature of the mge arrangement, we'll advise.
Hope this helps
Holly x
There is nothing in the mortgage terms about this. He applied for a BTL mortgage on a new property, has never lived in the property, never told them (C&G) he will live in it, never expected to live in it. Its been in this situation for 10 years I gather.
I understand he spoke to them last week and they said it was all to do with a new regulation, not to be concerned but he would be getting a letter every year asking his latest plan which now includes ignoring future requests!Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.0 -
I understand he spoke to them last week and they said it was all to do with a new regulation
Yes, already discussed, but as explained, they are rather over egging given the fact the FSA remit is in regards to regulated (ie residential) lending, which if this is a true BTL mge, there is cleary no regulatory requirement underpinning their request, but as also discussed as the mortgagee they have the right to determine how the loan will eventually be redeemed.
Can't understand what his issue is in furnishing them with the reqd info ??
Hope this helps
Holly0 -
holly_hobby wrote: »Yes, already discussed, but as explained, they are rather over egging given the fact the FSA remit is in regards to regulated (ie residential) lending, which if this is a true BTL mge, there is cleary no regulatory requirement underpinning their request, but as also discussed as the mortgagee they have the right to determine how the loan will eventually be redeemed.
Can't understand what his issue is in furnishing them with the reqd info ??
Hope this helps
Holly
Thanks Holly.
The issue is a very old fashioned view that by asking they are impugning his integrity. He promised to repay the loan by an agreed date and has done nothing to suggest he will not etc. But I agree its a strange attitude. After all if he just ignored their letters but paid the mortgage on time, what could they really do about it. Thanks againFew people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.0 -
Thanks Holly.
The issue is a very old fashioned view that by asking they are impugning his integrity. He promised to repay the loan by an agreed date and has done nothing to suggest he will not etc. But I agree its a strange attitude. After all if he just ignored their letters but paid the mortgage on time, what could they really do about it. Thanks again
To be fair he sounds rather odd, rather than old fashioned, in assuming that the lender has no rights to enquire how the loan will be redeemed.
If you, sorry he, simply ignored the letters, he may well find that way before the scheduled redemption date the lender may seek to change him on to C&I or even ask for him to find an alternative lender.
Anyhoo, this is all academic, his plan is to sell, he simply tells them that, no idea whats driving all the dramatics and cloak and dagger approach to simply answering the lenders reasonable question.
Takes all sorts I suppose ...
Hope this helps
Holly0 -
This sums it up.holly_hobby wrote: »To be fair he sounds rather odd0 -
Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.0
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